China, Japan Chase for Philippines’ First LNG Terminal

The Philippines has become a new front in Japan and China’s intense rivalry in overseas infrastructure as companies from both countries are rushing to build the first liquefied natural gas (LNG) import terminal in the Southeast Asian country.

Experts said China has an advantage in building energy infrastructure in the Philippines with its rich experience and cost effective facilities, despite having Japan as a strong contender.

According to a news report by Nikkei in mid-December, following China’s move, Japan has recently come to a cooperation agreement with its Philippine partner to bid for LNG infrastructure construction in the Southeast Asian country, since the Philippines faces a growing shortage of natural gas supply, which is expected to be exhausted in 2024.

The report said Japan’s largest natural gas utility Tokyo Gas and Philippine power company First Gen Corp had reached a preliminary deal in early December to jointly develop a LNG import terminal project in the Philippines, with the Japanese firm holding a 20-percent share in the project.

Early in June, China National Offshore Oil Corp (CNOOC) and Philippine fuel retailer Phoenix Petroleum also reached a deal to develop an LNG terminal project in the Philippines. Tanglawan Philippines LNG Inc., the registered joint venture of Phoenix and CNOOC, has recently submitted all the necessary requirements, one step closer to being finally approved by the Philippines’ Department of Energy (DOE).

“As the main driver of China’s LNG import businesses, CNOOC has significant experience in management, operations and technology to help build the archipelago’s first LNG terminal,” said Li Li, director of research at the Shanghai-based research and consulting firm ICIS China

China’s LNG imports in November set a new monthly record of 5.99 million tonnes, jumping 48.5 percent from a year ago, data from the General Administration of Customs showed.

China surmounted South Korea as the world’s second biggest LNG importer last year, and with its soaring gas demand, it is also expected to overtake Japan as the global top natural gas importer by the early 2020s.

Most energy analysts believed China, with many years of experience in infrastructure construction projects overseas, has a good strength in building LNG facilities with good quality and at a reasonable price and also being able to ensure a timely delivery.

Japan also has its strong points. It entered the Philippines market earlier, thus enjoying a better awareness there, the analysts said.

Experts said that the China’s bid for the LNG project also comes amid increasingly close China-Philippines relationship, indicating a further expansion in the cooperation between the two neighboring countries.

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